LEVELIZED COST OF STORAGE ANALYSIS

Energy storage systems are be rated in terms of both instantaneous power capacity and potential energy output (or “usable energy”). The instantaneous
power capacity of an energy storage system is defined as the maximum output of the invertor (in MW, kW, etc.) under specific operational and physical
conditions. The potential energy output of an energy storage system is defined as the maximum amount of energy (in MWh, kWh, etc.) the system can
store at one point in time. Both capital cost divided by instantaneous power capacity and capital cost divided by potential energy output are common
Industry conventions for cost quoting. This study describes capital costs in terms of potential energy output to capture the duration of the relevant
energy storage system, as well as its capacity.

Throughout this study, use cases require fixed potential energy output values. Due to physical and operating conditions, some energy storage systems
may need to be “oversized” on a usable energy basis to achieve these values. This oversizing results in depth of discharge over a single cycle that is less
than 100% (i.e., some technologies must maintain a constant charge).
Other factors not covered in this report would also have a potentially significant effect on the results presented herein, but have not been examined in the
scope of this current analysis. The analysis also does not address potential social and environmental externalities, including, for example, the long-term
residual and societal consequences of various conventional generation technologies (for which energy storage is a partial substitute) that are difficult to
measure (e.g., nuclear waste disposal, environmental impacts, etc.).

While energy storage is a beneficiary of and sensitive to various tax subsidies, this report presents the LCOS on an unsubsidized basis to isolate and
compare the technological and operational components of energy storage systems and use cases, as well as to present results that are applicable to a
global energy storage market.